To solve the housing crisis, let's think out of the box

The cost of living is a worry for many Australians, with the
price of bananas on the rise again and the humble green bean a
luxury item. But as an infrequent and reluctant shopper, I have
been struck anew by the cheapness of stuff.

On a recent hit-and-run mission to replace a toaster and
electric jug that had made a joint suicide pact, I was amazed at
the price tags. The replacement items cost less than the originals
I bought years ago. I ventured deeper and found flatscreen
televisions flying off the display shelves in swarms - and no
wonder.

Imports are largely to thank for the low inflation we have
enjoyed for years. Imports from China and elsewhere have provided
the competition that has made local producers lift their game,
lower their prices, or close shop.

But the story is different in housing. Australians, especially
young people, still confront spiralling costs in most parts of the
country. The high cost is blamed on taxes and land shortages. But
lack of competition from imported houses is part of the
problem.

Housing construction is one of the last protected domestic
industries. Even services such as dentistry and medicine are not as
sheltered, with some patients heading to India for cheaper
operations and cut-price orthodontics.

The housing construction industry is not protected by tariffs or
quotas or quarantine restrictions but by the sheer impossibility -
it seems - of being able to import a home. Those days may be
numbered, however.

Ikea, the store that brought the word "flat pack' into common
parlance, has begun exporting low-cost, stylish kit homes to
Britain. After several years of erecting the homes in Sweden,
Finland, Denmark and Norway, Ikea is embarking on its first venture
outside Scandinavia, with plans to build 1000 kit homes in Britain
over a year, starting in September.

In Britain the venture is regarded as part of the solution to
the all-too-familiar housing-affordability crisis, where demand
outstrips supply and not enough places are being built which young
people can afford.

These flat-pack houses, known as BoKlok (pronounced boo-klook),
are cleverly designed and energy-efficient and, judging from the
pictures, look like the kind of items featured in an Ikea
catalogue.

They have the hallmarks of Swedish design - modern,
timber-framed, open plan, wooden floors, tall windows on three
sides, higher-than-average ceilings, and fitted Ikea kitchens.

And for anyone who has struggled to put together an Ikea
bookshelf with the dreaded allen key, the best part - after the
price - is that you don't have to assemble them yourself.

They don't exactly arrive in a box; they are delivered on the
back of a truck in two pre-assembled units, with interiors already
fitted out. The two units are joined together by a crane, the roof
is put on, and then the exterior wall cladding. After the plumbing
and wiring is fixed, the place is ready to live in.

The homes are factory-built through a joint venture with the
Swedish construction giant Skanska. The theory goes that indoor
production (uninterrupted by bad weather) and production-line
techniques that ensure fewer faults cut construction costs by up to
40 per cent compared to conventional housing.

In Britain, apartments will begin at £90,000 ($213,000)and
three-bedroom family homes will start at less than £150,000,
compared to the £200,000-plus cost of the average conventional
house. More than 2500 of the homes have been sold in Scandinavia at
about 20 per cent less than the market price for similar
properties.

At Gateshead, in north-east England, site of the first planned
Ikea community, 120 apartments will be erected in L-shaped,
low-rise blocks. Three types of tenure will be on offer - shared
ownership, below market rental, and full ownership.

With typical thoroughness, Ikea researched the Swedish market in
the mid-1990s and saw the typical buyer as a single parent with one
child, no car and an average income. The company studied how much
this buyer could afford and set its budgets accordingly; it has
surveyed its buyers regularly to make constant improvements.

If it all feels a bit cool and socially engineered, that has
been no barrier to the homes' popularity. Ikea Australia's
marketing manager, Johan Ellstrom, was working in Oslo when the
BoKloks went on sale there, originally through the store. The
queues were so long a lottery was introduced. "It was a great
success," Ellstrom says.

There are no plans to export the BoKlok to Australia in the next
three years, he says. The Britain venture will be assessed
first.

The Federal Opposition Leader, Kevin Rudd, this week announced a
$500 million five-year plan to tackle housing affordability. Labor
would cover the infrastructure costs of new housing developments
with savings passed on to home buyers. It is a good idea. But it
might be worth calling Ikea's head office to urge it to fast-track
its BoKlok plans.

Cheap imports helped put a flatscreen television within reach of
average punters. It may take imports of cheap housing before the
average punters get a home of their own to watch it in.